Most Purchase Agreements are Contingent on Which Two Items? Fannie Mae
When it comes to purchasing a home, there are many factors to consider. One of the most important factors is the contingency clause in the purchase agreement. Contingencies are conditions that must be met before the sale can be completed. These clauses protect both the buyer and the seller by ensuring that certain conditions are met before the sale is finalized.
Fannie Mae, a government-sponsored enterprise that provides financing to mortgage lenders, has specific requirements for purchase agreements. In fact, most purchase agreements are contingent on two items required by Fannie Mae.
1. Home Inspection
The first item that Fannie Mae requires is a home inspection. A home inspection is an examination of the condition of the property by a qualified inspector. The inspection report will detail any issues or defects that may exist in the home.
The purpose of the home inspection contingency is to give the buyer an opportunity to assess the condition of the property and determine if there are any issues that need to be addressed before the sale can be completed. If the inspection reveals any significant issues, the buyer may have the option to renegotiate the terms of the sale, ask for repairs, or even walk away from the deal.
Fannie Mae requires that the home inspection be conducted by a qualified inspector and that the results of the inspection be included in the purchase agreement.
The second item that Fannie Mae requires is an appraisal. An appraisal is an evaluation of the property`s value by a qualified appraiser. The appraiser will examine the property and compare it to similar properties in the area to determine its value.
The purpose of the appraisal is to ensure that the property is worth the sale price. Fannie Mae requires that the appraisal be conducted by a qualified appraiser, and that the purchase agreement includes the results of the appraisal.
If the appraisal reveals that the property is worth less than the sale price, the buyer may have the option to renegotiate the terms of the sale, ask for a lower price, or even walk away from the deal.
In conclusion, Fannie Mae requires that most purchase agreements include two contingencies: a home inspection and an appraisal. These contingencies protect both the buyer and the seller by ensuring that the property is in good condition and that it is worth the sale price. As a homebuyer, it is important to understand these contingencies and to make sure they are included in your purchase agreement.